Sunday, December 31, 2006

This case has juicy facts because of its connection to debates about authenticity in memoirs and in fiction.But it’s really an important case about Dastar.

Plaintiff Antidote International Films, Inc. is an independent film production company.Defendant Bloomsbury is a London publisher, which in 2000 published a novel, Sarah.Sarah tells the story of a 12-year-old male prostitute in competition with his mother for tricks.Laura Albert wrote Sarah under the name J.T. Leroy, a persona she created.Other defendants are the corporation created to handle J.T. Leroy’s business interests and a woman who acted as a manager for Leroy, the corporation, and Albert. Though Sarah was published as fiction, defendants allegedly made a number of public statements strongly suggesting that it was based on J.T. Leroy’s own experiences (e.g., calling the book “semi-autobiographical”).These statements appeared in press releases, on a website, in book blurbs, and in other advertising.Albert also pretended to be J.T. Leroy in communications by fax, email, and telephone.For public appearances, Albert appered as “Speedie,” Leroy’s “keeper,” and the role of Leroy was played by a confederate, a woman in dark sunglasses and a wig.

Plaintiff’s founder believed in the authenticity of Sarah’s narrative and, based on his belief that the novel “was an aesthetic response to a horrific, real-life set of experiences,” decided to develop a film based on the story.He, like others, was impressed by Leroy’s ability to use art to overcome horrific personal circumstances, and had greater sympathy for the novel’s protagonist because he thought the protagonist was based on Leroy himself.

As a result, plaintiff negotiated for an option on the film rights for three years at $15,000 per year.Defendants allegedly took further steps during and after the negotiations to convince plaintiff that Leroy was real, for example by providing plaintiff with a false IRS form W-9 signed by Leroy.

In 2005, New York Magazine published an article claiming that Leroy was a mirage, and Albert was quickly exposed as Sarah’s author.Plaintiff stopped working on the film adaptation.Plaintiff alleged that, because of defendants’ fraud, no distributor or financier would invest in a project based on Sarah, whose value was predicated on the connection between Leroy, his experiences, and the novel; the book is now a joke (like Opal Mehta, or A Million Little Pieces).

Defendants moved to dismiss plaintiff’s Lanham Act claims.First, plaintiff argued that defendants’ representations constituted false designations of origin. Under Dastar, however, “origin” means the producer of the physical book, not the source of the expression therein.Plaintiff tried to argue around Dastar on the theory that Dastar came out the way it did because of the potential copyright-trademark conflict, which isn’t present here.The court concluded, however, that the rule laid down by Dastar applies regardless of whether a copyright claim is available.

Plaintiff also tried a more plausible distinction – it argued that defendants’ false representations were likely to cause confusion not just over the “origin” of Sarah, but also over “the affiliation, connection, or association of [Bloomsbury] with another person,” to wit, “J.T. Leroy.”Unfortunately, the complaint only mentioned “origin,” and plaintiff failed to cure this defect by amendment.The court went on to hold that, even if the complaint had properly alleged such confusion, it would simply restate the false designation of origin claims and would still be barred by Dastar.

I think that last conclusion is wrong, though it’s unlikely that the Supreme Court will tell us more about what Dastar means any time soon.A false affiliation claim doesn’t pose the Catch-22 problem in Dastar, where the defendant would have gotten sued for whatever it said.There is no cause of action for failing to disclose an affiliation or connection (setting aside possible false advertising claims under §43(a)(1)(B), which the Court left available in Dastar – though see below).Thus, only false affirmative claims about affiliation would be actionable under plaintiff’s theory.I have taught my trademark classes that claims such as those in Gilliam v. ABC probably survive Dastar precisely because of this distinction – the problem in Gilliam was that ABC explicitly identified Monty Python as the author of the mutilated works.Likewise, under the court’s rule, it seems that one could promote a movie as Stephen King’s Lawnmower Man with impunity, even if Stephen King’s closest connection to the film was that he once visited Hollywood.See Jane Ginsburg’s article on Dastar for more.

More broadly, you can’t apply “origin means physical origin” to “affiliation, connection, or association” claims without writing the latter out of the statute entirely.The basic claim of affiliation is precisely that someone other than the producer of the physical object endorsed, sponsored, or otherwise approved of the product or service.

Reading the decision narrowly, the court is holding that a claim of “authorship” is not equivalent to a claim of “affiliation, connection, or association” and must instead be brought under the (precluded) head of “origin.”But that’s hardly required by Dastar, given the absence of the policy considerations driving the Court’s interpretation of “origin.”The court says its extension of Dastar is necessary to avoid making Dastar “meaningless,” but the result in Dastar would be the same under my proposed rule, because Dastar didn’t make any affirmative claim of affiliation with Fox.

One might say this extra rule is necessary so that, when a well-known work enters the public domain -- if one ever does again -- the author’s heirs/former owner won’t be able to claim trademark rights to block free publication.Yet there would be nothing false about a claim that the author wrote the work in those circumstances, and almost any court would recognize that – and, one would hope, would award the defendants in such cases their attorneys’ fees.I’m not always a fan of leaving the limiting constructions for cases in which they’re needed, because courts sometimes forget that they’re needed, but here I’m willing to trust judicial good sense.

There is a policy problem present in this case: I can see a good argument that people shouldn’t be able to sue under the Lanham Act when books weren’t written by their supposed authors, or their supposed authors didn’t have the experiences they claimed to have, because (a) ghostwriting and exaggeration are standard publishing practices and (b) standard trademark analysis is insensitive to the First Amendment considerations involved.I’m sympathetic, but a rule crafted to address this doesn’t and shouldn’t come out of Dastar but rather out of the Rogers v. Grimaldi line of cases creating separate rules for expressive works. The Rogers line, not incidentally, takes exactly the opposite tack of Dastar, crafting medium-specific rules rather than defining words in the Lanham Act to cover all products and services.Rogers also left open the possibility of liability for explicit falsehoods in titles, like Ginger Rogers: My Story, whereas the court’s ruling here would preclude such liability.

Plaintiff separately alleged false advertising.The obvious problem is that defendants were plaintiff’s suppliers, not its competitors, which should be the end of it.But the court, again interpreting Dastar expansively, ruled that no Lanham Act claim could be brought based on a false authorship theory.Dastar’s reference to possible false advertising claims, the court said, was limited to representations about the substance of a work, rather than representations about the work’s authorship.Dastar’s holding that “origin” refers to producers, not authors, “necessarily implies” that §43(a)(1)(B)’s use of the terms “nature, characteristics, [and] qualities” excludes authorship.

The court’s ruling on false affiliation was shaky, but this one is worse.Pragmatically: Authorship and substance interpenetrate. Words written by one person (a president, a Holocaust survivor, a white man) mean something different than words written by another person who was formed by different experiences.

Doctrinally: Lanham Act false advertising claims have, along with the judicially imposed standing requirement and the requirement that false statements be made in “advertising or promotion,” a materiality requirement that again largely avoids the policy problems that the Supreme Court used to guide its interpretation of “origin.”Contrary to what the court here said, Fox wouldn’t have had a false advertising claim against Dastar, because it’s ludicrous to think that the omission of Fox’s name from Dastar’s advertising would be material to consumers, much less misleading.(At the heart of the problem in Dastar, I’m tempted to argue, is that the trademark half of the Lanham Act lacks a materiality requirement.)

Plaintiff also brought fraud claims.The elements of common law fraud are “a material, false representation, an intent to defraud thereby, and reasonable reliance on the representation, causing damage to the plaintiff.”The court found that plaintiff had adequately alleged all these elements.

The result raises another difficulty, again noted by scholars before me -- see Tom Bell’s Misunderestimating Dastar.If Dastar’s interpretation of “origin” is necessary to avoid conflict with copyright law and possible constitutional invalidity, then shouldn’t coordinate state-law claims based on false representations of authorship also be preempted?(Given plaintiff's preservation of state law claims, it should probably have added a state consumer protection claim, which replicates the Lanham Act false advertising claim without being controlled by Dastar.) On these facts, there is no conflict with copyright law, however, which suggests that more sensitive rules for avoiding copyright-trademark conflicts could be crafted than Dastar provided.

Dastar’s effects, it seems, keep widening like a stone thrown into the murky Lanham Act waters.When will we see the last ripple?

Friday, December 29, 2006

“This is a lawsuit over five dollars.” So begins the court’s analysis of pro se plaintiff Theresa Bradley’s claims against Google. Bradley actually did better than many Google opponents – one of her eight claims survived a motion to dismiss, the one for intentional destruction of property (emails in her Gmail account).

Bradley owned a small consulting business and ran a website for that business. She signed up for Google AdSense on August 10, 2006. Because Google didn’t provide her with any way to see which ads would be put on her site before they appeared there, she clicked on them in order to learn more, in violation of her contract with Google. She also asked Google to remove some of the ads, which Google did not do. On August 19, 2006, Google terminated her account, removed its ads, and failed to pay Bradley the approximately five dollars that ads on her site had generated. Bradley also had a Gmail account, through which she conducted her transactions with Google. On August 24, she discovered that all her communications with Google AdSense had been removed or deleted from her account; she further claimed that other emails had been deleted, and that emails with third parties had been “mixed up” with her emails.

Bradley sued (for at least the 35th time; she is “no stranger” to the court system). Her claims: false advertising under the Lanham Act, fraud, interference with prospective business advantage, violations of California Commercial Code § 2207 relating to alteration of contract terms, breach of contract, unlawful interception of electronic communications under 18 U.S.C. § 2520, invasion of privacy under California law, and intentional destruction of evidence, professional property, and personal property.

The false advertising claims hinged on Bradley’s allegation that Google falsely advertised that she’d be able to preview AdSense ads. As a result, she signed up with Google, and her “goodwill and relationships with her customers were damaged” because of the ads that Google placed on her site. The court, citing no law, found that this theory of damages was simply too attenuated. I am dubious, since the whole point of being able to approve or disapprove of AdSense ads is to be able to control their appropriateness to the website, which can only be of importance because of website visitors’ reactions. That is, the alleged harm is exactly the kind of harm you’d expect from uncontrolled ad placement. It’s the reason that the ability to preview AdSense ads is material to consumers. The better argument is that Bradley, who isn’t a competitor but a customer, lacks Lanham Act standing.

Bradley’s related fraud claims were dismissed for failure to plead with particularity.

Thursday, December 28, 2006

A great conceptual puzzle: Louis Vuitton is suing Dooney & Bourke over similar handbag designs.After remand from the Second Circuit and the TDRA, state and federal confusion and dilution claims are all in play.Except: D&B has a registration for the DB logo with the D&B intertwined, which under the TDRA bars dilution claims based on use of that mark.

So, it would seem, the dilution analysis will have to ignore any dilutive effect resulting from the linked initials in the accused handbag design.I have no idea how that could be done – testing a mock bag with just blobs of color, or made-up initials, to look for the dilutive effect of color and arrangement alone seems like a bad idea, in part because the logo effect of the DB may well be anti-dilutive, in that it provides consumers a separate reference point other than Louis Vuitton. I’d be curious to hear anyone else’s thoughts.

If a registration really does provide immunity from dilution claims based on use of a mark, can that immunity be defeated by claiming dilution of a broader trade dress where the mark is only one component of the allegedly infringing dress? This isn’t like a copyright/trademark conflict, where you can finesse solutions based on concepts like “use as a mark.”D&B has the federal right to use the DB logo as a mark for handbags, free of any dilution claims.Is that right as extensive as Louis Vuitton’s?

Given that plaintiffs have lots of freedom to define their trade dress to fit the facts of any given case, we are likely to encounter more cases of partial preemption in the future. Perhaps we’ll get some guidance about that from this case.

This latest round in a litigation deathmatch encompassing patent, trademark, false advertising, and false patent marking claims concerned plaintiff’s argument that Icon’s CrossBow personal training machine diluted the Nautilus Bowflex.This opinion granted summary judgment to defendant on state and federal dilution claims, and I admit to some puzzlement: The court applied the FTDA’s original language and found that Nautilus must lose because it had no evidence of actual dilution.But, as the case was pending when the TDRA was enacted, that’s no longer the standard – likely dilution will suffice.(I doubt plaintiff’s overall burden is decisively lightened by the TDRA.Showing that “Bowflex” is famous among the general consuming public has got to be easier than showing actual dilution – but see below for another problem.)The parties filed cross-summary judgment motions in early 2006, before the TDRA, then asked the court to hold the motions in abeyance during settlement discussions.The parties inexplicably failed to file even letter briefs on the TDRA when the abeyance expired, a month after the TDRA became law.

The court applied other pre-TDRA precedent, which probably survives: the Ninth Circuit’s rule that dilution requires identity or near identity of marks.A reasonable fact finder could conclude that consumers would perceive the marks as essentially the same, but it couldn’t be determined on summary judgment. This is a pretty expansive view of "essentially the same," given the differences between the marks.

Also of note: the court ruled that Icon’s purchase of “Bowflex” as a search engine keyword was not use of an identical mark for dilution purposes, because Icon showed that it did so only as comparative advertising.The text of the sponsored ad displayed in response to a Bowflex search was “Compare CrossBow to Bowflex.”

The state dilution claim was dismissed for two reasons: First, while the litigation was pending, Icon had received a federal registration for Crossbow, triggering the old FTDA preemption provision.Second, the state statute was identical to the federal statute, and thus had the same actual dilution requirement.Both of these merit some thought.

As for the first, Nautilus argued that Icon had only received the registration by telling the PTO that it would not use the mark until the litigation was resolved.The court found that the plain language of the statute still required preemption, a result that makes sense to me – I can’t see how the PTO can override the terms of the statute, in which case it’s the registration that resolves this portion of the litigation.(Plaintiff’s confusion claims remain.)The TDRA extends the blocking effect of the federal registration to federal dilution claims, so the dilution claim will go away entirely regardless of the lower likelihood of dilution standard.

That makes the second issue a moot point in this case, but not in others: Does the state statute move in lockstep with the federal rule, such that it’s now (back to) a likelihood of dilution standard even in the absence of amendment by the state legislature?Or does the old actual dilution standard apply until the legislature acts?I can see arguments both ways.Given that the actual dilution standard was probably imputed to the state law because of the FTDA in the first place, it seems more reasonable to continue the lockstep, since it’s not as if the state legislature specified actual dilution in the first place.

Practice tip: Get a federal registration! It’s protection from state dilution laws, which require only distinctiveness and not fame from plaintiffs and thus cover a lot more marks than federal law does.And a pending state dilution claim isn’t grounds for opposition.

Wednesday, December 27, 2006

Gorran v. Atkins Nutritionals, Inc., 05 Civ. 10679 (DC) (S.D.N.Y. Dec. 11, 2006): Jody Gorran was in good health, with low cholesterol and no cardiac problems, until he started the Atkins diet, allegedly in reliance on defendant’s representations that a high-fat, low-carb diet posed no cardiac risks.Defendant’s website, among other things, stated that eating high-fat foods posed no health risk in the absence of carbohydrates and that medical advice to the contrary was disproved by the evidence.After two and a half years on the Diet, his cholesterol was through the roof, he began experiencing chest pains, and he had to have an angioplasty, involving a stent inserted to keep an artery open.He sued, alleging products liability, negligent misrepresentation, and false advertising under Florida law.

Judge Chin dismissed Gorran’s claims under Rule 12(c), holding that food like cheesecake is not unreasonably dangerous for products liability purposes. In addition, statements about the Atkins diet’s health benefits and cardiac safety in the Atkins book and on the Atkins website were noncommercial speech, even though they also served to sell Atkins-branded food products (of which Gorran bought approximately $25 worth).The court ruled that the website contained a mix of commercial and noncommercial speech.Only information specific to the “superior nutrition and taste” of the Atkins products available for sale, not the website’s general advice on how to follow the diet or recommendations for optimizing health, was commercial speech.This is a tenuous distinction, though it may have worked in the present case.What happens when product labels or webpages make broad health claims, like an ad for Crisco stating that trans fats have been scientifically shown to improve health?Conversely, what if one page on a site touts the health benefits of supplement X, and then a separate page offers the supplement for sale?That’s not far different from what occurred here, but I doubt the court wanted to reward formal manipulation with a finding that the first page is noncommercial speech.

I’m also uncomfortable with the court’s reasoning that defendants’ conduct wasn’t “unfair or deceptive,” apparently because it was protected by the First Amendment. It could well be unfair and deceptive though still protected by the First Amendment; that’s a big part of what the First Amendment, in its modern incarnation, does.From all the evidence before the court at that stage, defendant is profiting by misleading people with a sweetly (and fatty) seductive story – eat as much as you want of tasty foods and lose weight, with no health risk.If this is deceptive, defendant is behaving wrongfully, even if its conduct isn’t actionable.(The court only referred to its earlier First Amendment determination, but it may also have been considering its holding that cheesecake isn’t unreasonably dangerous as a matter of law for products liability purposes – in which case I think it failed to take into account the ways in which Atkins deliberately changed the information environment, attempting to convince people that their previous understanding of how much cheesecake one could reasonably eat was too cautious.)The court’s alternative reasoning – that Florida law only considers direct economic damages, such as the price of the Atkins book, while Gorran is asserting personal injury damages – is a much firmer basis for its ruling.

Tuesday, December 26, 2006

My interest in IRBs is derivative -- I'm married to a historian who does 20th century history, including oral history. We've talked about the First Amendment challenges posed by IRBs (required for federal funding, but often expanding beyond their statutory mandate). Now he's started the aptly-named Institutional Review Blog to cover IRB news, discussion, and horror stories. The latest post notes a Northwestern Law Review symposium on IRBs, gently suggesting that the law professors, like their students, need to spend more time reading the statute.

If I had one wish for my students, it would be that they'd always start by reading the relevant statutes.

Friday, December 22, 2006

I have just begun Ellen Goodman's article in the Texas Law Review on the topic. It promises to be a good read, and quite relevant for current controversies, including the role of artificial/paid word-of-mouth advertising.

Saturday, December 16, 2006

Plaintiff’s trademark claim against its competitor, which did business under the name goNANI, failed because of defendant’s substantial evidence of use in commerce (on the internet, no less, potentially conferring at least national rights) of the term since at least 2000.By contrast, plaintiff first used GoNannies in commerce in July 2003, and applied for registration at that time.Plaintiff’s registration for GO NANNIES was issued in August 2005, but that of course does nothing to bar senior unregistered uses.Plaintiff’s failure to seek injunctive relief for more than six months after discovering defendant’s use, and more than five months after filing suit, also doomed its request.

Plaintiff also sued defendant for false advertising because it used its goNANI mark with an ®, falsely indicating that it held a federally registered trademark.

False registration claims hurt competitors (and possibly noncompetitor businesses), not consumers, both by falsely asserting federal rights in terms that may in fact be available to others and, potentially, by making a competitor seem like an infringer – a concern not unlike that courts have expressed in reverse confusion cases.These harms are like those caused by false patent markings.Unfortunately for the plaintiff in this case, there is no analogue in the Lanham Act to the part of the patent statute that specifically makes false patent marking illegal.As defendant was quick to point out, plaintiff could not explain how defendant’s use of ® caused plaintiff any harm, much less irreparable harm.Even though the ® was false and misleading, it’s not clear that there’s anyone with standing to challenge it – a consumer suit would presumably fail on the ground that it’s not a material misrepresentation as to consumers.

Similar but more pervasive problems in copyright have led some scholars to suggest that copyright law should give a more robust remedy for false copyright claims, beyond the limited penalties that exist for falsely claiming copyright in US government works. False trademark claims have caused less trouble so far (if you don’t count things like trademark owners’ lawsuits over uses of their marks in expressive works like NBC’s Heroes, which perhaps should count).I have yet to see a thorough analysis of false IP claims generally, but it would definitely be interesting to compare the various possible regulatory regimes.

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